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CDC Group plc

PRI reporting framework 2020

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Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

          Directors ESG, BI, DI, VCS
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

The board - including its development impact committee (DevCo) - has oversight of responsible investment activities across CDC. For instance, DevCo holds quarterly reviews of CDC's portfolio and pipeline to monitor progress against CDC's responsible investment objectives, and approves CDC's ESG policies. The CEO has ultimate accountability for ensuring that CDC's responsible investment policies are implemented; while the CIO and Investment Committee are responsible for making investment decisions in line with our responsible investment policies. Assessing the ESG challenges and opportunities associated with each proposed deal is an important factor in the decision-making process (with ESG covered prominently in investment committee papers and discussions).

The ESG-I, BI and DI teams have the primary responsibility for implementing CDC's Code of Responsible Investing. Meanwhile, the DI team quantify the effect of CDC's investments at the individual investment level and at a portfolio level. DI specialists are also embedded within each deal team, ensuring impact is incorporated into investment theses from an early stage. In 2018, the Value Creation Strategies (VCS) team was formed, which is responsible for oversight of four thematic areas (gender equality, human capital, job quality and climate) alongside a grant facility, CDC Plus. Together, these teams form the Responsible Investment branch of CDC.

In addition, CDC - particularly the Responsible Investment teams - frequently use consultants to carry out ESG research. For instance, the ESG-I and BI teams regularly use specialist consultants to complete ESG due diligence and monitoring on high risk and / or complex deals, while the DI team use expert advisors to undertake studies on the effect of specific types of investment.

 

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

70 Number

07.4. Additional information. [Optional]

CDC ensures that ESG responsibilities are specified in recruitment adverts for investment roles so that new employees are aware of their role in relation to the Code of Responsible Investing from the very beginning. Training is then provided by the Responsible Investment teams to all new hires on the investment teams.

CDC has a Responsible Investing team consisting of ESG-I, BI, DI, and VCS. In December 2019, CDC's ESG-I team consisted of 20 employees who are responsible for ensuring that ESG standards are integrated into all investments. The BI team consists of 14 employees who are responsible for business integrity considerations in CDC's investments. The DI team consists of 20 employees who are responsible for determining the potential development impact of an investment, setting indicators to track it, and implementing projects to maximise it. They then assess CDC's development impact against its organisational objectives. The VCS team had 16 employees spanning the four themes of gender, job quality, climate, and skills and development, plus our Technical Assistance Facility, which reviews grant funding applications and monitors disbursed funds.


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Other Chief-level staff or heads of departments

Portfolio managers

Investment analysts

Dedicated responsible investment staff

Investor relations

External managers or service providers

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

At a Board level, the board has strategic oversight of CDC’s climate strategy, the Development Committee has responsibility for implementation of the strategy, the Risk Committee for oversight of climate-related risk at portfolio-level and the Audit Committee for signing off CDC's TCFD disclosures as part of the financial accounts.

07.7 CC. For management-level roles that assess and manage climate-related issues, provide further information on the structure and processes involved.

Material climate risk and opportunities are assessed at ExCo level. Climate change has been integrated strategically and organisationally. Climate change is one of the key cross-cutting themes outlined in CDC’s 2017-2021 strategy and CDC has developed a Climate Change Strategy covering the whole organisation and investments across sectors and products. Climate change is also reflected organisationally at ExCo level where the Chief Impact Officer is responsible for the implementation of CDC’s Climate Change Strategy. Secondly the Chief Executive Officer is ultimately responsible for delivery of CDC’s corporate objectives for 2020 including objective number eight ‘Implement CDC’s Climate Change Strategy’, a key part of which is implementing the recommendations of TCFD. In addition, CDC is also in the process of hiring a new Chief Risk Officer who will have responsibility for the oversight and management of climate risk, both physical and transition.

CDC has two teams which work together on climate related risk an opportunity, the ESG Impact team which assess climate risk and value add opportunity per transaction and the Climate Change Team, within Value Creation Services which are responsible for implementing the 2019 Climate Change Strategy across the organisation.

07.8 CC. Indicate how your organisation engages external investment managers and/or service providers on the TCFD recommendations and their implementation.

Specify

          CDC hosted a climate training including TCFD for fund managers in November 2019. This was part of a four-day program.
        

SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other C-level staff or head of department

          Directors ESG, BI, DI, VCS
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investor relations

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Responsibilities for assessing ESG performance in CDC's investments is shared between CDC's ESG-I / BI teams and the relevant investment team. Ensuring that investments achieve development impact is built into senior team performance objectives and the DI grid outcomes are part of performance-based payments.

The investment team is responsible for all aspects of a transaction and so CDC's expectations with respect to responsible investment are an important part of each officer's performance management objectives. The Deal Team is led by the Deal Lead, who takes overall responsibility and accountability for all aspects of the deal. Each team member is individually responsible for delivering high-quality work in their respective field of specialisation (such as ESG, BI, DI, Legal) and role (such as financial modelling).

To enable investment officers to perform this role, the investment team attend training on ESG and BI matters, including a general introduction shortly after they join the organisation and being invited to other thematic workshops. The majority of training is received "on the job" by working with the ESG-I / BI teams on individual deals and undertaking site visits together. Furthermore, CDC launched a new investment process manual at the end of 2019, to provide even greater clarity on all CDC’s key policies and processes relevant to selecting, making, managing and exiting investments responsibly.

In 2018, IC members began to receive training on responsible investment topics, beginning with gender equality and women's economic empowerment.

In 2019, CDC introduced a new behavioural competency framework in line with its core values, explicitly linking adherence to the CDC mission of development impact to progression across all levels.

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          CDC’s board has a development impact committee (DevCo) with strong academic and commercial credentials on environmental and social issues, experience at development finance institutions and of impact investing, among other skill sets. The development committee has broad oversight of CDC’s ESG and development impact strategies (including the Code of Responsible Investing), and receives quarterly updates on portfolio performance and responsible investment metrics. In addition, CDC's CEO, CIO and deputy CIO, COO and board members have previous experience incorporating ESG into the investment decision-making process through previous high-level experience at other responsible investment organisations.
        

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